The J.M. Smucker Co (NYSE: SJM) is the talk of social media this morning with the announcement that it will acquire Hostess Brands (NASDAQ: TWNK) in a deal pegged at $5.6 billion.
The transaction will see the maker of the iconic Twinkie brand acquired for $34.25 per share, which is to be paid via a combination of $30.00 in cash per share, and 0.03002 shares of J.M. Smucker per share of Hostess. The transaction is set to include the sweet baked goods brands owned by Hostess, such as Twinkies, CoffeeCakes, HoHos, Zingers and more, as well as the Voortman Cookie brand.
The deal will also see Smuckers acquire five operating manufacturing facilities and a sixth that is under construction, as well as a distribution facility in Kansas. Roughly 3,000 employees will be added to Smuckers roster following the closing of the transaction.
“With this acquisition, we are adding an iconic sweet snacking platform; enhancing our ability to deliver brands consumers love and convenient solutions they desire; and leveraging the attributes Hostess Brands offers, including its strong convenience store distribution and leading innovation pipeline, combined with our strong commercial organization and consistent retail execution across channels to drive continued growth,” commented Mark Smucker, CEO of J.M. Smucker Co.
One of the driving strategic points behind the deal is the expansion of family brands owned by Smuckers, adding the sweet baked goods category to the portfolio of products currently offered. Hostess is expected to add net sales contributions of $1.5 billion to J.M. Smucker, while cost synergies are expected to amount to $100 million annually.
For shareholders, the transaction is expected to be adjusted earnings per share accretive in the first year, while strong cash flow is expected to enable rapid deleveraging.
The transaction is slated to close in the third quarter of the firms current fiscal year, which has a year end of April 30, 2024.
The J.M. Smucker Co last traded at $141.58 on the NYSE.
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